Buy to let Mortgages
Over recent years many people have turned their backs on the stock market, preferring to invest their money in property in the hope it will bring them the financial security required for their retirement.
Mortgages for landlords
When buying a property to rent, the mortgage is possibly the most critical factor. You cannot take out a typical residential mortgage. However, most banks and building societies offer buy-to-let mortgages specifically for landlords.
Higher deposits for buy-to-let
A buy-to-let mortgage is comparable in most ways to a residential mortgage. However, there are some differences. Firstly, the interest rate is typically higher. You will also require a larger deposit on a buy-to-let mortgage - a minimum of 25% is usual, although many of the most competitive mortgages demand 40% plus.
With a buy-to-let mortgage, lenders look at the expected rental income and don’t assess the mortgage on your personal income, as they would with a residential mortgage. Typically lenders insist that the monthly rental income must equal 125% of the monthly interest payments. For example, if you are paying mortgage interest of £400 per month, your rental income should be at least £500 per month.
The tougher conditions reflect the higher risk of buy-to-let mortgages, as statistically borrowers are more likely to default on a buy-to-let mortgage than residential mortgages.
Are you likely to qualify?
Most banks and building societies insist on a minimum age, often 25. Also they often require a minimum income, usually around £20 to £25,000 per year. Each buy-to-let lender has their own restrictions on how many buy-to-lets they will allow you to have.
Choice of mortgage deals
The choice will typically include fixed rate and tracker mortgages. Arrangement fees often apply - and they can be much higher than residential mortgages. Sometimes these fees can be fixed or charged as a percentage of the mortgage amount.
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Whatever you are hoping to achieve from the rental market, either call or email Concept Mortgages via the contact us link and let us help bring your ideas to life. With access to all of the mortgage market's specialist buy-to-let lenders, Concept Mortgages have the solution.
(The Financial Services Auhtority does not regulate most Buy to Let Mortgages)
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.